New York Community Bank (NYCB), the parent company of Flagstaff Bank, has faced a challenging week with its stock dropping to the lowest level since 1996 at the opening of the market on Friday. The bank suffered a surprise quarterly loss in January, raising concerns within the U.S. regional banking sector just a year after the collapse of Silicon Valley Bank.
As of the end of last year, NYCB boasted $116.3 billion in assets, $85.8 billion in loans, deposits totaling $81.4 billion, and total stockholders’ equity amounting to $10.8 billion. The company acquired most of the assets of Signature Bank after Signature's failure during the banking crisis of March 2023.
This week, NYCB announced a fourth-quarter-earnings loss which was $2.4 billion worse than previously stated. The bank attributed this to "material weaknesses" in its loan review process. While the loss won't affect its regulatory or credit agreements, the announcement caused a 23% drop in the company's shares during after-hours trading on Thursday.
The stock had already experienced a substantial fall in February after the bank reported a $252 million loss for the fourth quarter. Altogether, the bank's stock has declined by 60% since January 30 when NYCB announced a 70% drop in its dividend and a half-billion-dollar increase in its reserve for loan losses, surprising investors and raising concerns about the health of regional lenders.
Amid these challenges, NYCB announced a change in leadership, with Thomas R. Cangemi stepping down from his role as president and CEO after 27 years with the company. He was immediately succeeded by Alessandro (Sandro) DiNello, who was appointed as the new president and CEO, as well as the executive chairman of the board. DiNello, who had already been serving as the executive chairman since mid-February, expressed confidence in steering the bank towards becoming a "larger, more diversified commercial bank.”
While there are indications that regulators could potentially take over NYCB, it is speculated that they are unlikely to do so to avoid a situation similar to the one experienced with Silicon Valley Bank last year.